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Exam (elaborations)

Construction Finance Exam

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Construction Finance Exam

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Definition



depreciation is equal every year of the life of the investment



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Straight line Double declining balance method




Double declining balance Equal Percentage


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Term



Equal Percentage

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depreciation is independent of
depreciation is the same each year salvage value and never stops
decreasing




depreciation is independent of depreciation is an equal
salvage value. book value never percentage every year of the
stops decreasing. life of investment


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Term



True



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method of comparing alternatives is suitable for mutually exclusive alternatives
with the same functional duration (lives)




difference between original purchase price and accumulated depreciation is
book value




equipment costs are of 2 types: wear and tear (depreciation) and O&M
(operation and maintenance)

, indirect costs, which are not directly associated with specific work or products,
are not major considerations for cost recovery during bid preperation


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Term



Christmas Club



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predetermined standars where the minimum acceptable interest rate is used to
calculate present worth. is present worth is equal or greater than zero,
alternative is viable.




short-term savings account in which money is deposited periodically to be
withdrawn at the end of the year for Christmas. The account holders earn
interest on their account balances.




cost that are incurred as a physical piece of the construction is placed and are
associated directly with the physical end item




gurantess the owner that the principal will complete the contract according to its
terms including price and time.


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